Under Fannie Mae Selling Guide B4-1.3-06 Uniform Appraisal Dataset (UAD) property condition ratings, which statement is correct?
Correct Answer
B) If any portion of the dwelling is C6, rate the whole dwelling C6; C6 loans are ineligible for sale to Fannie Mae until repaired to at least C5
Under the cited Fannie policy, the overall condition rating is normally holistic; C6 is the specified safety/soundness/structural-integrity exception. If any portion is C6, the dwelling is rated C6, and deficient items must be repaired to a resulting minimum C5 before the loan can be sold to Fannie. Apply the relevant reporting policy/supplement for the assignment; this is not a universal law for every lender.
Why This Is the Correct Answer
Option B is correct because Fannie Mae's Selling Guide states that if any portion of the dwelling is rated C6, the whole dwelling must be rated C6. Loans secured by C6 properties are not eligible for sale to Fannie Mae. Deficient items must be repaired so the property reaches at least C5 before the loan can be sold to Fannie Mae.
Why the Other Options Are Wrong
Option A: Rate condition by ranking the subject against neighborhood averages rather than on the property's own physical features and upkeep
Option A rates condition by ranking the subject against neighborhood averages. UAD condition ratings describe the property's own physical condition and upkeep, not its rank within a neighborhood.
Option C: Treat C6 as the rating for a newly built, unoccupied dwelling that shows no physical depreciation of any kind
Option C treats C6 as the rating for a new, unoccupied dwelling with no depreciation. That describes C1, the top rating; C6 is the lowest rating, tied to deficiencies affecting safety, soundness or structural integrity.
Option D: Treat C1–C6 ratings as optional labels that the appraiser may omit on appraisals that are otherwise required to use UAD
Option D treats C1 through C6 ratings as optional labels on appraisals required to use UAD. On UAD-required appraisals, the condition rating is a required data point, not optional.
One C6 makes all C6
C1 is brand new and C6 is the worst; any C6 portion pulls the whole house to C6 until repairs bring it to at least C5.
How to use: Use this to recall the C6 exception and its loan eligibility effect.
Exam Tip
Remember the scale runs from C1 new to C6 worst, and C6 is the one rating where a single portion controls the whole dwelling rating.
Common Mistakes to Avoid
- -Averaging a C6 portion into a higher overall rating
- -Thinking C6 is the rating for new construction
- -Rating condition by comparison to neighborhood averages
Concept Deep Dive
Analysis
This question tests Fannie Mae's UAD condition rating policy, especially the C6 rule. Condition ratings are usually an overall view of the dwelling, but C6 is an exception: if any portion is C6, the whole dwelling is C6. Loans on C6 properties are not eligible for sale to Fannie Mae until the deficiencies are repaired to at least C5.
Background Knowledge
The Uniform Appraisal Dataset standardizes how appraisers report condition and quality, with condition ratings from C1 (new) to C6 (substantial damage affecting safety, soundness or structural integrity). Most ratings reflect the overall dwelling. The C6 rule ensures serious deficiencies are not averaged away.
Real-World Application
An appraiser inspects a home in good overall shape except for a sagging, structurally unsound rear addition. Under Fannie Mae policy, the appraiser rates the dwelling C6 and describes the deficiency. The lender requires repairs before the loan can be delivered to Fannie Mae.
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